Loss Assessment Coverage: What’s That?

When living in a condominium or a community with a homeowners association (HOA), there may be special assessments that are levied on the homeowners in addition to their regular monthly fees. These assessments may be used for a variety of purposes, such as to repair damage to the common areas or to cover unexpected expenses. 

Loss assessment coverage is an additional coverage option that is available on most homeowners insurance policies for those living in a condominium or a community with an HOA. This coverage is designed to protect homeowners in the event that the HOA levies special assessments on its members related to certain types of damage, such as damage from a hurricane or other natural disaster.

Typically, loss assessment coverage will pay (up to a certain amount, as defined by the insurance policy) for any assessments that the homeowner is legally obligated to pay as a result of a covered loss. It’s important to note that loss assessment coverage only applies to assessments that are made as a result of a covered loss. If the assessment is made for a reason that is not covered under the HOA’s insurance policy, such as for routine maintenance or upgrades, the loss assessment coverage will not apply. Additionally, the amount of coverage that is available under loss assessment coverage will vary depending on the policy. Some policies may offer a lower limit for loss assessment coverage, while others may offer a higher limit. It’s important for homeowners to review their policy and ensure that they have adequate coverage for their needs.

In summary, loss assessment coverage is an important coverage option for those living in a condominium or a community with an HOA. Homeowners should review their policies to ensure that they have adequate coverage and understand the limitations and exclusions of their coverage. If the policyholder has additional questions with respect to loss assessment coverage, Parrish Law is happy to help.